One of the primary claims of capitalism’s advocates is that it creates innovation. However, the reality is that capitalism does considerably more to hinder innovation than to encourage or push it along. Much of the innovation that capitalists and their supporters try to take credit for occurred in the public commons. Much of the innovation that capitalism is actually responsible for is superficial consumer choice.
Research and development in capitalism focuses on creating wealth for the capitalist class. For an idea to receive research and development, the individual or team who works on the project must convince an individual or organization to invest in the project. The individual or organization will reject the idea if the analysis indicates that the research and development will cost more money than it creates.
While the project is in the research and development phase, the project will receive constant reevaluations to ensure that the project will generate more money than cost. At any development phase, the financier can terminate the project if the project appears to cause more financial costs than potential benefits. Therefore, innovation only occurs after an idea or product has succeeded numerous rounds of determining whether it is profitable enough.
There are two primary forms of innovation. The first form is market pull, which focuses on known consumer desires or needs. The other form is called technology push, which creates a product that the consumer does not realize that they need but that they are likely to adopt. Technology push is considerably more of a gamble than market pull.
As to how all that plays into capitalism, those factors cause more of a hindrance to innovation. Placing hurdles in the way purposely kills numerous ideas due to financial prediction. The financial prediction may or may not be accurate. Without the product existing in the real world, there is no way to know the adoption rate of the product. Companies also want to ensure profitability, which makes them averse to significant risks.
David Graeber stated that the best way to advance innovation is to allow innovators the funding and space to create whatever they want. He rightly stated that sometimes they generate innovation, and sometimes they do not. However, more innovation comes from fewer restrictions on the innovator’s creativity. Graeber also stated that the best way to hinder innovation is to get innovators to compete with one another for funding for projects.
The idea of open innovation happened to a spectacular extent in history. The former Soviet Union adopted an approach to innovation that encouraged innovators and researchers to innovate and research without financial pressures hindering them. The United States took a similar approach after witnessing the advancements that the Soviet Union developed at that time. Regardless of whether one agrees or disagrees with either government, the reality is that both governments made the correct choices for innovation.
Several technologies developed from the Cold War innovation era. The one that caused the most significant impact on society is the internet. The internet is the creation of the U.S. Department of Defense. Therefore, the internet is not the product of a private sector business. The internet’s original purpose was to create a decentralized network for communication in a nuclear war. Although war certainly benefits capitalists and the internet aides them, it is hard to see the early creation of the internet as a directly capitalistic innovation.
The withering away of the public commons in favor of privatization into private sector businesses has changed the course of technological development. Projects that advance human understanding and innovate technologies that do not aid profits are unlikely to develop at all. Instead, what innovation looks like today is the superficial diversification of consumer products.
Some innovation beyond product diversification does occur. One of the primary examples is what David Graeber has referred to as “form filling technologies.” He means that technologies like social media and data collection devices have an explicit reliance on data collection.
Similarly, surveillance technologies are receiving numerous advances. The increase in innovation for surveillance technologies occurs due to a similar financial pressure on intelligence collection. Human intelligence does not create the precision that technological monitoring creates. Therefore, organizations focus more on technical intelligence collection methods to streamline financial resource allocation. The impact on individual privacy is significant. Although the common defense of open-ended surveillance is that the only people to worry about it are people who have something to hide, that is not the case. All people have things they do in private and do not want others to see, usually things as innocent as dancing or singing. Surveillance changes behavior and has a chilling effect on the perception of freedom.
However, financial pressures on innovative projects and a withering away of the commons in favor of private-sector profitability are not the only things that reduce innovation. Capitalism encourages business owners to pay workers as little of a wage as possible to ensure their profits, which then forces many of us to work excessive hours. The reduction in finances and time resources for the average worker means that many people focus more on work than pursuing their dreams, the majority giving up on them entirely.
One aspect of capitalism’s burden on would-be innovators is the excessive costs associated with education. We currently have the technology & capability to make education, and in fact any information, free & accessible to all people. Imagine how many more individuals would pursue a life of research or innovation if they were not worried about student debt. This sad reality perfectly illustrates how capitalism is not an efficient system that maximizes individual choice.
Another aspect that hinders innovation is the psychological impacts of capitalism. Mark Fisher’s book Capitalist Realism discusses how the Washington consensus that emerged from the failure of the Soviet Union created a sense that the only working economic system is capitalism. Fighting for a better economic order that challenged capitalism felt like a lost cause. Considering the brutality and inefficiency of capitalism, this created a bleak and depressing notion that a better system was only a dream.
Mark Fisher wrote another book called Ghosts of My Life: Writings on Depression, Hauntology and Lost Futures. Fisher hypothesizes that cultural change has experienced a slow cancellation. The reality is that businesses that produce films and television and record labels that bankroll artists are risk-averse. Aversion to risk causes a reduction in artistic innovation. Instead, it concentrates on recycling successful cultural elements from the past. Individuals within the public also see no other alternative to the consumerism they are indoctrinated into and appreciate the comfort of cultural fixtures from times when a future seemed possible.
Fisher was far from the only person to notice capitalism’s impact on creative output. Theodor W. Adorno and Max Horkheimer studied the phenomenon of the culture industry and came to similar conclusions. They stated that the purpose of capitalism is to produce a profit. Therefore, the arts in capitalism tended toward homogeneity to appeal to a broad audience. The lack of diversity in entertainment echoed the dehumanization due to specialized labor, producing a numbing effect on the working consumer.
The reality is that capitalism does far more to hinder things like research, innovation, and creativity than encourage them. The capitalist system we live under has the sole purpose of creating as much profit as possible without any high-minded goals that operate independently of a profit motive. The destructive, depressing, and enraging situation this puts us in, which we can & must organize to end, is that most creative persons work multiple jobs to pay bills instead of following the path necessary to contribute their ideas.
– David Frost
Very well written and informative I liked it a lot.